European banks, hated by majority, put in one of the biggest moves higher ever yesterday, and we are seeing the move continue today, although less violently.
It was only a few weeks ago so many were sending us the "European banks about to break out charts". If the vaccine will save EU banks is to be seen.
On Oct 23 we wrote about the EU banks outlining a few important points;
"Despite all the bearish arguments to be made, some early possible green shoots have been emerging lately…earnings have started to lead when it comes to EU banks…Do recall the M&A set up via GS we outlined earlier today"
We concluded our logic with;
"Things can move quickly when it comes to "forgotten" sectors. We like convexity plays for a possible further squeeze in the SX7E."
The move higher has been brutal and more violent than we imagined, but EU banks remain stuck in a range, and as we approach the upper part of the range, the prudent investor should not get too greedy. Chasing longs here looks like a very late trade.